Energy cost 'may double'

ELECTRICITY from new atomic power stations will cost twice as much if the nuclear industry is privatised, an Independent on Sunday inquiry has discovered.

Estimates from both within and outside Nuclear Electric - which put its case for privatisation to the Government last week - show that there will have to be huge increases in prices to attract private investment into the business.

And if the state-owned firm, which runs all the nuclear power stations in England and Wales, succeeds in replacing existing capacity with new plants, consumers may eventually have to pay double the pounds 1.18bn they now provide each year to subsidise nuclear power.

In addition, Nuclear Electric wants the Government to free it from the 'unprivatisable risks and liabilities' of its six ageing Magnox reactors - which may well increase the cost to the public even more.

The firm is pressing for rapid privatisation because it realises that the Government will never again finance the huge cost of a new nuclear power station. It says: 'The company can and should be privatised at the earliest opportunity.'

Its proposal - made in a four-volume submission to the Government's Nuclear Review, which will decide the future of the industry - will be taken seriously by ministers because the firm has done startlingly well since being set up in 1990. It has increased its output by almost 45 per cent, doubled productivity - and cut 4,500 jobs. It has increased its market share from 16 per cent of the electricity sold in England and Wales to 23 per cent, and has dramatically reduced the number of accidents at its reactors.

Yet the average home still subsidises nuclear power by an estimated pounds 54 a year. In all, this hand-out, which is supposed to end in 1998, will total pounds 9.2bn.

Between 1975 and 1988 the UK Atomic Energy Authority alone received more than pounds 10bn (at 1986-7 prices), compared with only about pounds 156m for research on energy conservation and pounds 154m for all renewable sources - such as solar, wind, tide and wave - put together.

For years, as the nuclear industry now admits, atomic energy was also heavily subsidised by coal-fired electricity, even though the Central Electricity Generating Board and ministers insisted that it was cheaper to get electricity from the atom than from coal.

Nuclear Electric was set up, complete with generous subsidy, after it became clear the power stations were unsellable. Michael Heseltine, President of the Board of Trade, has said that 'the subsidy is to deal with the decommissioning of old and unsafe plants' and Nuclear Electric added that it was 'not intended to be a subsidy for our ongoing commercial operations'. But the firm has admitted spending pounds 2bn of it on building its new Sizewell B Pressurised Water Reactor.

Nuclear Electric now wants to build twin reactors next door at a cost of pounds 3.5bn, but realises that this requires private capital. It admits that electricity bills will rise because investors will require an 11 per cent return on their capital, compared with 5 per cent by the state. It estimates that electricity from Sizewell C will cost 3.7p per unit - much more than the average cost of 2.4p for electricity and 3.1p for nuclear electricity.

Dr Gordon MacKerron, one of Britain's leading experts on the costs of power generation, says that the eventual figures will be much higher. 'Nuclear Electric has set out to get the numbers as low as they can squeeze them. They are neither plausible nor credible.'

An unpublished report by the Hoskyns Group of management consultants, financed by British Coal, estimates that electricity from Sizewell C could cost between 5.82p and 7.35p per unit. A Greenpeace study estimates that the public could have to pay a pounds 2.37bn subsidy if Nuclear Electric supplied a quarter of the country's electricity from new stations.

Nuclear Electric says nuclear power deserves such special treatment because it will help provide security of supply and because reactors do not produce the pollution that cause acid rain and global warming.

Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete tomorrow
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
peopleBroadcaster has a new role bringing 'the big stories that matter' to US
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Life and Style
Moves to regulate e-cigarettes and similar products as medicines come amid increasing evidence of their effectiveness
healthHuge anti-smoking campaign kicks off on Wednesday
Life and Style
fashionEveryone, apparently
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
Arts and Entertainment
A new Banksy entitled 'Art Buff' has appeared in Folkestone, Kent
Arts and Entertainment
Shia LaBeouf is one of Brad Pitt's favourite actors in the world ever, apparently
filmsAn 'eccentric' choice, certainly
Life and Style
An Internet security expert has warned that voice recognition technology needs to be more secure
techExperts warn hackers could control our homes or spend our money simply by speaking
peopleBenjamin Netanyahu trolled by group promoting two-state solution
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Head of Marketing - Acquisition & Direct Reponse Marketing

£90000 - £135000 per annum: Ashdown Group: Head of Marketing (B2C, Acquisition...

1st Line Service Desk Analyst

£27000 - £30000 Per Annum: Clearwater People Solutions Ltd: Our client who are...

Trainee Recruitment Consultant - Birmingham - Huxley Associates

£18000 - £23000 per annum + Commission: SThree: Huxley Associates are currentl...

Trainee Recruitment Consultant - Birmingham - Computer Futures

£18000 - £23000 per annum + Commission: SThree: Computer Futures are currently...

Day In a Page

Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?
Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

Homegrown ballerina is on the rise

Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
Education, eduction, education? Our growing fascination with what really goes on in school

Education, education, education

TV documentaries filmed in classrooms are now a genre in their own right
It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

It’s perfectly reasonable to negotiate with villains like Isis

So why don’t we do it and save some lives?
This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

Is a sub-2-hour race now within sight?

Dennis Kimetto breaks marathon record
We shall not be moved, say Stratford's single parents fighting eviction

Inside the E15 'occupation'

We shall not be moved, say Stratford single parents
Air strikes alone will fail to stop Isis

Air strikes alone will fail to stop Isis

Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
Nadhim Zahawi: From a refugee on welfare to the heart of No 10

Nadhim Zahawi: From a refugee on welfare to the heart of No 10

The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
Witches: A history of misogyny

Witches: A history of misogyny

The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
Shona Rhimes interview: Meet the most powerful woman in US television

Meet the most powerful woman in US television

Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

Endangered communities photographed 'like Kate Moss'

Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style